Rental growth red hot across most of Australia

CoreLogic’s June property price results recorded 6.6% annual rental growth, which was the strongest annual increase in rents since February 2009:

Australian rental growth

Rents growing fast.

Now CoreLogic has released its quarterly rental review, which shows that rental growth is booming across the entire nation, with the exception of Melbourne and Sydney:

Rental growth summary

Rents booming across most of the nation.

As expected, house rental rises continue to outpace units:

Houses vs units

House rental growth steamrolls units.

Whereas rental yields continue to compress as dwelling value rises outpace rental rises:

Rental yields

Yields compression.

According to CoreLogic’s head of research, Eliza Owen:

Australia has not seen rental value increases this high for over a decade. Following subdued rental performance through much of the 2010s, the Australian rental market has seen an increase in values due to many of the same factors that have led to the current housing price upswing. These factors include increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have also exacerbated rental price increases, particularly in major centres of regional Australia…

In Sydney and Melbourne, unit rents continue to show year on year decline, at -1.1% and -6.4% respectively. As noted in previous quarters, these cities, which have historically had the highest intake of international migrants, have seen rental demand most impacted by international border closures amid the pandemic. Although demand across these unit markets remains fairly subdued, there are signs that rents may be stabilising at lower levels.

Logically, rents should soften next year as the large pipeline of HomeBuilder dwellings begin to hit the market. That said, the fact that rents soared as immigration collapsed is extraordinary and counter intuitive. So expect the unexpected.

Unconventional Economist


  1. I heard there is a rental squeeze in New York City as well, for the following reason: Before Covid, 3 people would share an apartment, all of them in the office during the week and outside for recreation on weekends. Now, because everyone is working from home, the same apartment can only accommodate 2 people, because each of them needs a separate space to use as a home office.

  2. “That said, the fact that rents soared as immigration collapsed is extraordinary and counter intuitive.”
    Very odd indeed.

  3. Have noticed recently prices for higher density apartments around St Kilda have come back significantly.
    2 bedders which were selling $590000 approx 2017 have sold between $460000-490000 in the last few weeks.

  4. Anders Andersen

    Can someone explain to me how this rental situation came to be; Lowest immigration for how many years; people who are locked out of the country; lowest student numbers in decades and a bloody low VR, how come???

    • Just anecdotally at least in Sydney I think that the number of large, well-located empty family homes is probably significant. In a suburb near me in North Sydney there is an entire block of almost 40 houses with about 30 empty over the past 3 years. Probably waiting for the purchase of the remainder and development approval.

    • Maybe people bought second places to avoid lockdowns. Notice the crazy traffic leaving the city prior to lockdown? A former colleague lived in an apartment, but bought a house in the outer suburbs for the space. Kept the apartment just in case.

  5. No, I’d say valuations are up, hence rents need to rise also.
    People are also spreading out a bit, but I’d say just landlords driving most of it, say those that own 5 properties or more.
    Just a joke, at the government.
    Yes rates have fallen but that’s not gunna effect a greedy pig.

    • Anders Andersen

      I had that discussion once with a co-worker who said if NG was stopped he would raise his rents. I asked him what was stopping him from raising them now (5 yrs ago) as he didn’t come across as a generous person and if he could just raise his rents because he felt like it, he would! He just looked at me with this grin that said the penny had dropped.

      You just can’t raise rents because! There has to be a supply /demand imbalance and that’s what I’d like to know, how has it come about with the lose of students, immigrants etc?

      • Is it as simple as rents are rising to match people’s ability to pay? Similar to how used cars and the property market in general are rising as people have maintained their employment but haven’t been able to spend on holidays or going out so redirect that spending elsewhere?

        My theory is that the eviction moratoriums most states implemented caused a genuine shortage as everyone bunkered down and refused to leave their homes. The remaining properties that came to market were snapped up by returning expats, people trying to get out of apartments or sharehouse situations due to them sucking during lockdowns, or else moving interstate to lower risk states (Perth being most impacted due to getting on top of Covid early on). Because these people moving were desperate and had money in their pocket due to no holidays etc, they were willing to bid the price up. This was a genuine supply / demand imbalance which drove the initial rises which then became a self fulfilling prophecy as people started being forced out of their homes again. By this stage, every landlord had heard they could get an extra $100 a week so they all raised their rents in unison.

        Maybe you can raise rents ‘just because’ if everybody is expecting them to go up…

  6. Gavin HegneyMEMBER

    People tend to rent in times of uncertainty and also rent where they cant necessarily afford to buy but want to live